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Multinational Corporations
Author(s): John Stopford
Reviewed work(s):
Source: Foreign Policy, No. 113 (Winter, 1998-1999), pp. 12-24
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 MULTINATIONA
CORPORATIONS
Recentadvances in information technology,
with
coupled deregulation andmarketliber-
alization
worldwide, havefueledanunprece-
dentedsurgein the growthof multinational
A A corporations (MNCs).While some regard
II as
them ruthless exploiters,othersviewthem
as benignenginesof prosperity. Buttoday's
V multinationals bear little resemblanceto
theirforebears.
Theyarereinventing them-
selvesin diversewaysthat confoundthe
assumptionsof criticsandadvocates alike.
byJohnStopford

Globalization Has Made MNCsMore

"Footloose" Than Ever

Partlytrue. There is a widespread perceptionthat multinational

corporations will rushto relocatein responseto changingeconomic
conditions.YettherearecompellingreasonsformanyMNCs to stayput
or,at the veryleast,to shiftthe locationof theiroperationsat a grad-
ual pace. Some multinationalsoften find themselves"locked"into
emerginghot-spot"clusters" of relatedassetsandspecialized
infrastruc-
ture-such as Silicon Valleyfor microprocessors, TsukubaCity for
miniaturization,andLondonforforeignexchange.Increasingly, such
clusterscanevenbefoundin developingcountriessuchasIndia,where
Bangalore hasbecomea hubforthe softwareindustry. Theseimmobile
resources arecomprised of a densenetworkof specialized, oftensmall,
independententerprises that supplycrucialinputsandaredifficultto
replicateelsewhere.LeadingMNCsmustinteractwith theseclustersif
theyareto gainandretainaccessto the latestthinking.

JOHN STOP FORD is professorof international

business
at theLondonBusiness
School
andchairman
of theLearning
Partnership.

12 FOREIGN POLICY
 Stopford

AnotherreasonwhyMNCsarereluctantto uproottheiroperations is
that theydependuponthe skillsof specialized
teamsof localworkers.
Volkswagen,forexample,is usingits Resendeplantin Brazilas a lead
siteforexperimentingwithwaysto changethe assemblyprocess.Multi-
nationalsthat have becomedependenton such "intelligentsystems"
can continueto attractinvestorsby maintainingand strengthening
thesehumanassets,not bywalkingaway.

MNCs Are, First and Foremost, Creatures of Their

Home Countries

Not always. Most people assume that the home country always
getsfirstprioritywheneverMNCs have to makehardchoices:If faced
with a downturnin the market,multinationalswill close facilities
abroadto protectthose at home.YetJapaneseMNCshave strivedto
remaincompetitiveby developinglower-costcapacityin facilities
abroad.In doingso, corporateexecutiveshaveplayeda role in "hol-
lowingout"Japan'seconomyand have brokenwith generationsof
traditionthatput nationalinterestaboveall else.
Moreover, corporationsnowplacehigherpriorityon the innovation
process-regardlessof where thatprocessis centered-thanon outdated
notionsof home country.SomeMNCshave developedworldproduct
mandatesthatfarmoutmanagement authority andresearch-and-devel-
to
opmentleadership foreign units.Tokyo is "home"to IBM'spersonal
computers, while Taiwan is "home" to Philips'computermonitors.
Indeed,there is now widespread uneasethat MNCsare becoming
actingin the interestsof shareholders
truly"stateless," who arethem-
selvesbecominggloballydispersed. Theseconcernsareamplified bythe
growingtrendamongmajorcorporations to promoteforeignnationals
to top managementpositions.Some Frenchand Germancompanies
even useEnglishas the linguafrancafortheirmanagement communi-
cationsglobally.[SeeJoshuaFishman's articleon page26.]

All Multinationals Are Large Corporations

No. It is easy to get that impression, since giant MNCsdominate the

news. The top 100 multinationalsown nearly$2 trillion of assetsout-
side their home countries,a quarterof the world'sstock of all foreign
directinvestment(FDI). And the recentwave of megamergers has made

WINTER 1998-99 13
ThinkAgain

manylargemultinationals
evenlarger.Buta closerlookat the market-
place revealsthat the surgein MNCgrowthis alsobeingdrivenby myriad
newcomers,manyof whomareactuallyquitesmall.Mostof the esti-
mated45,000firmsthatoperateinternationally employfewerthan250
people. It is commonplace to find servicecompaniesthat maintain
fewerthan100employeesoperatingacrossmorethan 15 countries.
Foryearsthe traditional wisdomamongmultinational corporations
wasthatbiggeris better.LargeMNCs couldlowertheirproduction costs
byproducing massive volumes to serve markets.
global Byachievingsuch
"economies of scale,"theygaineda crucialadvantage overtheircompeti-
tors.In today'sturbulent markets, however,sizedoesnot alwaysmatter.
Big banks have been merging across bordersto makethemselveseven
bigger,buttheirsuccessrateshavebeendismal.In the oil andgasindus-
try,traditional leaderssuchas ExxonandShell now faceseriouschal-
lenges from smaller upstartsthat have carvedout industryniches in
exploration or lubricants.
ThesuccessofEnronin transforming itselffrom
a sleepy,domestic-pipeline operator in Texasto an internationalforcein
gasandpowergeneration showshowpotentthisnewchallengecanbe.
New competitorsareemphasizing the powerof intangibleresources
such as intellectualpropertyand a flexibleorganizational structure
that allowsfirmsto respondbetterto theircustomers'diverseneeds.
These emergingmultinationalsare beginningto developand link
togetherexpertteamswithinthe corporationin waysthat resemble
the activitiesof the hot-spotclustersthatlie outsidethe corporation.
In contrastto traditionaleconomic modelsof competition,these
companieshavefoundthateconomiesof scalecanbestbe achievedat
the corporatelevel ratherthanthe productionlevel.
The messageis clearto the majorincumbents: transform ordie.At
a time when size and marketsharesare growingin importancefor
someMNCs, forothersthe valueof incumbencyhas neverbeen less.

MNCMarkets Are Impenetrable to Rival

Companies
No. Multinational
leaderssuchas GeneralElectricand Shell took
many yearsto build their empires,helping create the impressionthat
growthis slow and dependenton physicalassets(such as sprawlingfac-
tories) to erect high barriersto the entryof new competitors.But what
aboutMicrosoft(software),Cisco (computers),Fresenius(dialysistreat-

14 FOREIGN POLICY
 Stopford

ment),Enron(energy),IspatSteel,andmanyotherfirmsthathavebuilt
billion-dollarinternational businessesin just a few years?They have
reliedon humanskillsto promotegrowthand remaincompetitive.
Thesemultinationals possessorganizational hierarchiesthatareideally
suited to the creation and deploymentof human resourcesand
intangibleassetssuchas patentsor brands.Bycombiningtheseattrib-
uteswith a reputationforreliability, thesenew specialistshave taken
businessawayfrommuchlargerincumbents.
Innovations in strategyareat theheartof today'srapidinternational-
ization.Forexample,it tookIndia'sIspatSteelonly 10 yearsto become
one of the top 10 steelmakersin the world.IspatSteelchallengedthe
old businessmodel-based on achievingeconomiesof scale through
giantproduction units--bybuildinga globalnetworkof small-scale steel
plants.Along the way,it replacedtradewith local production.Ispat
addedfurthercorporate-level strengthby transferring acrossborders
lessonslearnedin anyone plantaboutpromoting greaterefficiency.
In otherindustries,newtechnology is transformingsupplypossibilities.
Masscustomization allowsa customerto getpreciselywhathe orshewants,
anywhere in theworld.A personcanwalkintoa bicycleshopin theUnit-
ed States,specifythe preferred designandcomponents, havethe bicycle
builtto orderoverseas, andrideit homefromtheshopwithinweeks.Sim-
ilarly,Britishwomenhave been experimenting with computer-assisted
equipment thatallowsthemto specifytheperfectfitfortheirjeans,which
arecutandsewnin LatinAmerica. Creating thenecessary in the
flexibility
supply chainto achieve thesenew performance demands is a challenge that
manyincumbent MNCs arefindingdifficultto meet.
Competitionis no longersolelyaboutrichlyendowedfirmsbattling
againstpoorerones:It is alsoa contestto developstrategies andlearnnew
skills.Competition nowneedsto bethoughtof in termsof theintensityof
managers' imagination. The messageof today's competitive environment
is thatDavidcanbeatGoliath-anddoesso withincreasing frequency.

Only Some Industries Are Going Global

Not anymore.A fewyearsago,the conventionalwisdomheldthat
many industrieswere imperviousto globalization,particularlythose in
the service sector.Yet today we find MNCsin office cleaning (Interna-
tional Service Systemsin Denmark),dialysistreatmentclinics (Frese-
nius in Germany), and fresh-foodretailing (Sainsburysin the United

WINTER 1998-99 15
ThinkAgain

Companylis
My of The
Total Reenues ofSele~tedMultinatonal (ororation

WAL*MART S
Wal-Mart Inc.
Stores, VS. Greece
Billion
$119.3 . Billion
$119.1

Volwge AG.ewZaln
$6 . Blion065 illio

Business VS.
International
Mochines
Corporation Egypt
$78.5Billion Billion
$75.5

S12 .9 III 55lin5$ 291 ilio

*li~nr~Ir S

SONY
V56.
SonyCorporation VVS. Czech
Republic
,O,55Billion Billion
$54.9

5 50aI
0S0
Genra e
9 i 09
Mote:Allcorporate
revenues
fromfiscal onorbefore
yearending 1998.
March
1998"Global
Sources:Fortune's 500"andtheWorld World
Bank's Development
Report
1998/1999.

16 FOREIGN POLICY
 Stopford

Kingdom).Thereare internationaloperatorsin realestate,law,and

even simpleservicessuchas taxisandhairdressing. In the absenceof
protectiveregulations,no sectorin anycountrycan be confidentthat
it will neverbe confrontedby foreigncompetitors.
None of these developments suggestthat all firmsmustgo global.
Butto surviveeven localbusinesses can (andmust)adoptglobalstan-
dards.A firmcanbe world-class in behaviorwithoutbeingglobalin its
assetdisposition,providedit hasa globalperspective, a globalinforma-
tion base, and the necessaryimaginationto strive for continuous
improvement andadaptto shiftingcircumstances. Forexample,there
aremanyfast-growing businessesin India-suchasthe luggagecompany
VIP--thathave achievedworld-classstatusin operationalefficiency
andtechnicalproficiency andthatarerunbyentrepreneurs whorelent-
lesslytravelthe worldin searchof freshinspiration. Thesefirmsmay
well be someof tomorrow's MNCs, leveragingthe advantages thatthey
havealreadycreatedathome.Inmanyindustries, the greatestchallenge
to purelylocalbusinessescomesfromtheirimmediateneighbors, firms
that have been fasterto seizethe opportunities affordedby the infor-
mationrevolutionandliberalization.

MNCsAre Bigger Than TheirAssets

True.The reachandinfluenceof multinationals, largeandsmall,is
fargreaterthan the officialstatisticssuggest.Policymakers can, there-
underestimate
fore,seriously the extent to which nationaleconomies
havebecomeintertwined withothers.Thereareat leasttwosourcesfor
thismisconception: the wayin whichcross-border investments areesti-
matedandthe mannerin whichthe "boundary" of a firmis defined.
The official figuresfor the flow of FDI-the historicalcost-
accountingbasisfor the assetbase of multinationalcorporations-
show an annualflow of nearly$400 billion. The United Nations,
however,has recentlybegunto questionthese figuresand has esti-
matedthat if one includesthe capitalmobilizedby localborrowings
and the equitysharesof partners,the "real"figureis closerto $1.4
trillionperyear.In otherwords,a corporation's "presence" in a coun-
try goes beyond the assets that it chooses to locate there.
The influenceof a multinationalcan also be gaugedby its effect on
local suppliersas it createsnew demandand setsnew standardsof quality.
All theseelementsarepartof a worldwherethe localproductionof MNCs

WINTER 1998-99 17
ThinkAgain

in overseasmarketsnow greatlyexceedsthe sumof worldtrade.The

resultingdeepintegration of nationaleconomiesis growingso fastthat
anysuggestion in developedeconomiesthatthe domestic-policy agenda
canbe isolatedfromthe globaleconomyseemsantediluvian.
Perhapseven moreseriously,the explosionof strategicalliances
amongfirmsis transforming the competitivelandscape.One estimate
is that morethan 20,000allianceshave been formedwithinthe last
two yearsalone.How,then, shouldone now think aboutwhereeco-
nomicpoweris located?As one executiveobservedsomeyearsago:
"Theelectronicsbusinessin Europeis not the sameas the European
electronicsbusiness." Competitionis no longerdefinedsolelyby the
ownership assets; is alsoa matterof who is in leaguewithwhom.
of it
The airlineindustryin its postderegulationphase,forexample,is coa-
lescing around several global One
alliances: such partnershipis the
StarAlliance,with Lufthansa andUnitedAirlinesas centralplayers.
These groupshope to gain advantagesfromsharedticketing,loyalty
programs (suchasfrequentflyermiles),andeven the occasionaluseof
sharedequipment.[See EllisJuan's"Aviation:The PoliticsandEco-
nomicsof a Boom,"FOREIGN POLICY, Winter1997-98.]
Publicpolicyhas yet to come to gripswith the salient issuethat
ownershipis not the sameas control,andthat the realpowerof the
MNCslies in their ability to exert control far beyond their legal
"boundaries." New rulesare needed,probablyon an international
basis,to ensurethat this new "group-to-group" competitionis ade-
quatelysupervised to avoid abuses of power.
MNCs Are Inherently Exploitative

Yesandno. Advocacygroupsoftenportraymultinationals as globe-

trottingsweatshopoperators,indifferent polluters,and systematictax
evaders.Butformanyindustries, laborcostsarenot the determining fac-
tor in decidingwhereto locate.Remember the debateoverthe North
AmericanFreeTradeAgreementandpresidential candidateRossPerot's
warningof a "giantsuckingsound?" If lowwageswerethe primary crite-
ria,thenU.S. businesses
wouldhaveleapfrogged overMexicoandrelo-
cated in Haiti. Laborcostsin manysegmentsof consumerelectronicsare
less than 5 percent of the total cost (althoughin other segmentsand
industries,such as textiles, wage rate differentialscan be significant).
Overall,wagesareonly one partof the productivityandqualityequation.
18 FOREIGN POLICY
 Stopford

Thatsaid,exploitationremainsa problem.Buthowmuchof thisis a

functionof businessin general,ratherthanMNCs in particular?
Smaller,
localfirmsoftencanbe muchmoreexploitativethanforeigners. Multi-
nationalstypicallypayat or abovethe goingwageandprovidesuperior
training.Buteven if mostMNCs arewellintentioned,theysufferfroma
credibility
gap.The very factthattheycan,andsometimes do,leavethe
host countrycontradictstheir implicitcommitmentto provideeco-
nomicsecuritythrough"good" employment. Manymanagement teams
underestimate this reality.Perhapsunwittingly, MNCscan fuel public
concernbybeingculturally insensitive,not honoringpromises madeby
their predecessors,and being inconsistentin other aspectsof their
"socialcontract"withlocalsociety.
Withregardto the environment,internationalbigbusinessis both
the creatorof pollution and the only resourceavailablefor its
cleanup.The MNCs'recordon pollutionpales in comparisonwith
those of manylocal businessesand state-ownedenterprises: Lookat
the environmentaldamage in the former Soviet Union and Eastern
Europe,not to mentiontoday'smessin China.
By whose standardsshouldperformance be judged?Shouldlocal
businessesin EasternEuropeadhereto local standardswhile MNCs
operatingthere are held to morestringentinternationalstandards?
Who is reallygoingto be able to implementthe KyotoProtocolon
Climate Change-local governmentsfaced with strong domestic
oppositionor MNCsthat can be held accountablethroughinterna-
tionalregulations? It shouldnot be forgottenthat the MontrealPro-
tocol on Substancesthat Depletethe OzoneLayerowesmuchof its
successto the active participationof MNCsthat possessedboth the
incentiveto writeworkableregulations andthe technicalexpertiseto
definewhatwaspossible.Butmultinationals alsoneedto accepttheir
obligation,as Shell has to
recentlydone, engagemuchmoreexten-
sivelyin the publicdebateaboutenvironmental-policy options.
The issue of tax evasion continues to generate acrimonious
debate,despite guidelinesproducedby the Organisationfor Eco-
nomic Cooperationand Development.Multinationalcorporations
protestthat they pay their taxesresponsibly.Forexample,the U.S.
Chamber of Commerce in Bangkok claimed a few years ago that
MNCspaid 70 percent of Thailand's corporate taxes, implying con-
siderable tax evasion by the locals. But even this seemingly simple
claim was clouded by the intricate workingsof the local tax code.

WINTER 1998-99 19
ThinkAgain

Somestategovernments in the UnitedStates,suchas California's,

have soughtto tax MNCsbasedon a proportionof theirworldwide
income,regardless of their local operations.The
of the profitability
underlying motive of suchlegislation preemptpossibletaxevasion
is to
through transfer
pricepractices-whereby multinationalsoverpriceand
underprice componentsshippedamongvariousaffiliatesin an attempt
to shift incomefromhigh- to low-taxvenues.Corporatereactionto
broadtaxationhasbeenpredictably negative.Whatis the benchmark
forfairness? The debatewill mostlikelycontinueas an arcanetechni-
cal subject,leavingpublicopinionunalteredin itsnegativeperception.

Investments by MNCsAre Good, Investments by

International Money Managers Are Bad
Not necessarily.Foreigndirectinvestmentby multinationalcorpo-
rationshasa long-termeffectandis not alwaysmobile.Foreignportfo-
lio investment(FPI) is mostly volatile money that can go away
ovemight-and often does,as demonstrated by the 1998 panicover
emergingmarkets. AlthoughspendingplansforFDIarebeingcutback,
few firmsarerushingto the exit. Therefore,FDI mightbe morestable
thanFPI,buttherehavebeenperiodsof volatility.In the 1970s,when
Malaysiaannouncedplansforhighlydiscriminatory ethniccontrolsas
partof thatcountry's
NewEconomicPolicy,manyMNCs concludedthat
the governmenthad abandonedits favorableinvestmentclimate.
Accordingly,theycutbackon capitalspending,closedsomeplants,and
movedmoneyoffshore.Such instances,however,have becomerare:
Mostgovernments wantto welcomeforeigners, not scarethemaway.
Another popularmisconceptionis that, since foreign direct
investmentand foreignportfolioinvestmenthave both boomedin
the 1990s [seecharton next page],they are somehowrelated.The
driversbehindthem,however,aredifferent.Foreignportfolioinvest-
ment is a story of deregulationand the changing attitudesof
investors.Therearenew opportunities to investin emergingmarkets
that used to be closed. Moreover,the perceivedrisk of investing
abroadhas declinedas betterinformationhas becomeavailable.
Whereas the principal objective of FPI is to maximize the
return to the investor, FDI has a more complex set of motivations.
One such motivation is resourceseeking-gaining access either to
natural resources (an oil field or copper mine) or man-made

20 FOREIGN POLICY
 Stopford

FDI Stays, FPI Goes

Investment
Direct
Foreign Portfolio
vs.Foreign inEmerging
Investment
Equity Markets

FDI
FPEI

8 0::B~?::. 1~~~-::-I':-?/~~ii --:-::~::'~~~.. . ~::'';: ~ _;: ~-I.'~ _:;~-:i- ?~- ;:-i:~ ?_lj

S~~i?
~tf~
~~'~ $1$
1~!I~~I
if~i~~i~II? I~X?LS~~~
L~s~?-XI~
10

Nations'
SourcesUnited Investment
World 1997andtheWorld
Report Bank's
Global Finance
Development 1998.

resources (skilled labor or the technologies within a cluster).

There are also market-seeking investors who hope to gain a
foothold in an expandinglocal market.And there are efficiency-
seekinginvestorswho believe that a seriesof investmentslinked
acrossborderscan lower total systemcosts below what could be
achieved in one territoryalone. These objectives cannot be
attainedovernightandthe costsof quittingareusuallyhigh. Con-
sequently,most FDI activity has been concentratedin relatively
few countries, leaving the poorest countries unable to benefit
from the MNCs' resources and abilities to create new industries.

MNCs Are Creations of Wealthy Countries

thishasbeenthe case,withthe United
Not anymore.Historically
KingdomandUnitedStatesin leadingpositions.Butmanyof thenew-
comersarebasedin developingcountries.Forexample,Taiwanis now
home to manyMNCs, suchas computercompaniesAcer and Mitac,
thathavesecuredhighworldmarketsharesin manynicheproducts-

WINTER 1998-99 21
ThinkAgain

mostnotably,handyscanners(96 percent)andthe PC mouse(63 per-

cent). Manydeveloping-country firmsthat deal in naturalresources,
suchas Petrobras in BrazilandKuwaitOil, have expandedabroadto
controlmoreof the chainof supplyand get closerto consumers. For
instance,Petroleosde Venezuela owns a
Citgo, leading chain of gassta-
tions in the United States.Manynew formsof multinationalsare
emerging-suchas the familyempiresof the overseasChinese-that
addfurthervarietyto the stewof organizationalformsnow represent-
ed by the multinationals.Governmentsin someof the smallercoun-
tries now find that they must contend with both host-and
home-country influencesin theirnegotiationswithMNCs.

MNCs Are Beyond Government Control

Absolutely not. The relationshipbetween governmentsand

multinationalsis characterized by a complexdistributionof benefits.
Multinationalcorporations increasinglydemandthe "freedom" they
need to optimizetheir operationsacrossborders,with the goal of
loweringtheirtotal costsandcontinuouslyupgrading quality.Their
in
key bargainingchip dealing with host governmentsis that they
have the optionnotto invest.Butonce multinationalsentera coun-
try, they are, to some degree,locked in by the commitmentsthat
they have madeto developlocal operationsand providejob train-
ing. Multinationalsneed accessto local skills and other resources
such as hot-spot clusters.Host governmentsneed MNCsto act as
agentsin buildingcompetitivenessand trade.
Insteadof engagingin adversarial bargainingaboutthe distribution
of wealth,bothsideshavea strongincentiveto workon buildingpart-
nershipsthatcreatewealthin the firstplace.The growthof "welcome-
mat" investment incentives-tax breaks, investments grants,
sometimeseven preferential accessto capitalandguarantees of exclu-
sive marketrights-is one indicatorof the sea changein government
thinking.Governments woulddo wellto employofficialswhonot only
understand the economicsof traditional marketstructuresbutalsothe
managerial forces thatchange those structures.
In addition,morevigor-
ous intergovemmental collaboration is neededto strengtheninstitu-
tions such as the WorldTradeOrganization.
Policymakersurgentlyneed a new mindset if they are to maintaina
reasonableequityin the balanceof poweramongstates,firms,and con-
22 FOREIGN POLICY
 Stopford

sumers. Just as domestic banks require regulatoryinstitutions that

restraintheirspeculativeinstincts,MNCsrequireregulatorymechanisms
that check their instincts to put profitabove all else. The challenge is
to maintainfairnesswithoutsabotagingthe innovationenginethat drives
both new and old MNCsand createsnew wealth. Consumersand gov-
ernmentscan no longerrely exclusivelyon marketmechanismsto rein
in multinationals,nor can they blindly trust executives in the board-
room to do the "rightthing."

WANT TO KNOW MORE?

Multinationalcorporations(MNCs)have been a sourceof controversy
ever since the East India Company developed the British taste for
tea and a Chinese taste for opium. KarlMarx'sDas Kapital was writ-
ten in part as an attack on international capitalism. In this century,
many books-reflecting the popular fear that foreign MNCsdestroy
the fabric of local society and loot its resources-have argued for
firmer state control. See, for example, Jean Jacques Servan-
Schreiber'sLe Defi am&ricain(London: Hamish Hamilton; 1968)
and Richard Barnet and Ronald Mueller's Global Reach: The
Power of the Multinational Corporations (New York:Simon and
Schuster, 1974). RaymondVernon providesa more sober assessment
in Sovereignty at Bay (New York:Basic Books, 1971) and his later,
slightly revisionist work, Storm over the Multinationals (Cam-
bridge:HarvardUniversity Press, 1977).
An essential reference for some of the best-available statistics
and commentary on the growth of MNCs and the subsequent
regulatory response is the United Nations Conference on Trade
and Development's annual World Investment Report. For more
detail on the changing international division of labor, see Peter
Dicken's Global Shift: The Internationalization of Economic
Activity (New York: Guilford Press, 1998).
Excellent assessmentsof the impactof MNCs on economic progress,
especially in developing countries, can be found in Ted Moran, ed.,
Multinational Corporations: The Political Economy of Foreign
Direct Investment (Lexington: Lexington Books, 1985). John Stop-
ford and Susan Strange explore the possibilitythat nations and firms
might forma partnershipin fosteringeconomic development in Rival

WINTER 1998-99 23
 ThinkAgain

States, RivalFirms(Cambridge: Cambridge UniversityPress,1991).

For an encyclopedictreatmentof the manycompetingtheories
aboutwhat drivesforeigndirectinvestmentand its impacton host
economies,see John Dunning'sMultinationalEnterprisesand the
GlobalEconomy(Wokingham:Addison-Wesley,1993). Dunning,
ed., Governments, Globalization and International Business
(Oxford:OxfordUniversityPress,1997) offerscountrycase studies
that vividly illustratehow effortsto separateMNCsfromthe wider
policy debateover the workingsof the internationalfinancialand
tradesystemare counterproductive. The rise of immobileassetsin
the globalizingeconomyis exploredin G.M. PeterSwann,Martha
Prevezer,and DavidStout, eds. The Dynamicsof IndustrialClus-
tering(Oxford:OxfordUniversityPress,1998).A detailedexplanation
of corporatealliancescan be foundin YvesDoz and GaryHamel's
AllianceAdvantage(Boston:HBSPress,1998).
Forlinksto relatedWebsites,as well as a comprehensive indexof
relatedFOREIGN POLICY articles, access www.foreignpolicy.com.

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